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More on Geithner January 14, 2009

Posted by neoavatara in Economy, Politics.
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I have gotten not too few emails stating that I have been too hard on Timothy Geithner and the recent allegations of tax problems.

I disagree.

First, remember that when Geithner was named, I was very positive about his choice.  The post on Novermber 21, 2008, can be seen here.  So I am not a knee jerk anti-Geithner person.

That said, the recent allegations are serious.

Let us rember that Kimball Wood, Zoe Baird, Linda Chavez, all former Cabinet nominees that were thrown under the bus for paying an undocumented cleaning lady.  And Geithner is going to be Sec. of Treasury; therefore, he will in charge of the INTERNAL REVENUE SERVICE.  Additionally, this guy is supposed to be an economic expert!  If he can’t get his taxes right, no one should be able to.  Second, I have heard a thousand times today that it was an ‘honest’ mistake, and should be ignored.  Um, are you saying that Wood, Baird, and Chavez were being dishonest?

One other statement has been that Geither is so smart, so essential, that he must be confirmed no matter what.  He is the ONLY one that understands TARP (per Jonathan Alter on MSNBC today).  There is a reason he understands TARP:  he was instrumental in the creation of TARP, and closely worked with Paulson, Bernanke, Goldman Sachs and others to create the mess that is TARP.

http://www.cnn.com/2009/POLITICS/01/14/transition.wrap/index.html

The Obama campaign has stated that this is ‘a common mistake’.

According to a statement by the committee, Geithner failed to pay self-employment taxes for money he received while he working for the International Monetary Fund from 2001-2004.  In 2006, the Internal Revenue Service audited Geithner for tax years 2003 and 2004, and he paid $16,732 for the taxes and interest for those years, the statement said. After Obama nominated him for treasury secretary, Geithner voluntarily amended his taxes for 2001 and 2002, paying $25,970 for those taxes and interest, the committee said.

First, this is not a ‘common’ mistake.  I have been paid self-employment taxes, paying social security and medicare taxes out-of-pocket.  And I did this without an accountant.  Geitner is supposed to be a tax expert, is about to head the IRS, had a CPA helping him, and wasn’t smart enough to know he was supposed to pay these taxes?

Sen. Charles Schumer said Wednesday that he was “very optimistic that the confirmation will move forward.”

“[Geithner] said he had made mistakes. He was very contrite about it, and he said he’d fully rectified those mistakes immediately,” Schumer said. “The general view, not universal, in the committee was that what he had done clearly was not right but was not something that ought to prevent his nomination, and I’ve heard that from both Democrats and Republicans on the committee.”

Um, patently false.  You will note that MOST of the back taxes were not paid until AFTER he was nominated by Obama.  That is not immediate; that is 5 years after the fact.  And there are rumblings that Geithner hesitated on paying some of the taxes because it falls outside the term of limitation.

The media has been ridiculous in their defense of Geithner on this.  Atleast the Senate is delaying the meetings until more can be found out about these issues.  The housekeeper issue can be thrown away, as it has been in the past.  But for the man who basically will oversee the IRS to not pay correct taxes for multiple years is a serious issue.  I don’t think it is enough to prevent him from being confirmed, but he must answer serious questions, and take culpability.  Anything less in unacceptable.

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Comments»

1. Gilmour Poincaree - January 14, 2009

I believe you’re just raising a storm with a glass of water …

2. towp - January 14, 2009

What happens if I make an honest mistake–no more double standards—no more passes.

Keep on telling it like it is and if you need another glas of water I’ve got 2 good hands !

neoavatara - January 14, 2009

I think Geithner likely is the best candidate for the job. That said, it is inexcusable that a man that is about to oversee the IRS doesn’t know that independent contractors have to pay social security and medicare taxes out of pocket. Also, I would feel better if he had paid this before being nominated. He had already been audited once, why didn’t he pay off all the penalties?

3. Cindy - January 14, 2009

Who says Geithner is the best candidate for the job? Are we so hard up that we would bend to allow this guy to be the head of the IRS and not paid his taxes and only paid them just before he was nominated??? Wonder if the IRS would be that forgiving if we the average people make an “honest mistake”. Shame on Obama for making this seem like everyone does it!! Shame on Lyndsey Graham too. Surely we are NOT that despirate!!!

neoavatara - January 14, 2009

Apparently, we are that desperate…

4. Ryan - January 14, 2009

Wow – talk about hypocrisy! The Democrats villify Joe the Plumber for owing less than $1,200 for back taxes but Geithner’s $34,000 is a “an honest mistake?”
And this is your next Secretary of the Treasury.

neoavatara - January 14, 2009

Good point.

5. samuel - January 14, 2009

this is a disgrace. This is just a smoke screen. How about asking the role that the NY FED plays in running our country to hell? why don’t they audit the NY Federal Reserve (NO… IN CASE YOU DIDNOT KNOW IT IS NOT A GOVERNMENT ENTITY)? after all, it is privately owned Reserve, so why not audit it? What a scam this is… People raise issues when there’s nothing to be raised… focus on the real issue, not whether he paid taxes or not… But how come the Federal Reserve is not disclosing all information to what it did when buying treasuries? Why is forexample Bloomsberg having to jump hoops to get that info? you don’t believe me, here you go the story: http://hubpages.com/hub/Bloomberg-Lawsuit-Against-Federal-Reserve-For-Not-Disclosing-Emergency-Loans….what a sham… THIS IS A DISGRACE AND A SMOKE SCREEN… ASK REAL QUESTIONS….

6. samuel - January 14, 2009

we argue about non-stories while the real stories and the real scam as perpetrated by Geithner and Co. goes on unnoticed. what a sham people think Obama’s administration is going to be different. Tim Geithner was at the Federal Reserve before Obama was elected. He and helicopter Bernanke are the ones that told us the economy was strong when it was tanking until Lehman went hell in a handbasket… and you think Obama is going to save you!

7. stew - January 14, 2009

Well said Neoavatara, we can’t afford to allow someone who obviously have little disregard for our tax laws run the IRS.

8. Terry - January 15, 2009

I am appalled that the failure to pay self-employment tax by Tim Geithner on his 2001-2004 tax returns would be explained away as an “honest mistake”, and that the Obama administration would continue to support Mr. Geithner as the nominee for Treasury Secretary. As a CPA who has worked with employees of international organizations for many years, I can assure you that the employees are briefed on their tax responsibilities, including the requirement that US citizens pay self-employment tax. Employees of international organizations receive special tax treatment as the result of international treaties, and the employees are well-informed that they are being taxed under a different tax regime as a result of working for an international organization.

Mr. Geithner did not pay the self-employment taxes for 2001 through 2004, but of even greater concern is the fact that he did not correct 2001 and 2002 when his 2003 and 2004 returns were audited in 2006. At that point, he could certainly no longer feign ignorance. In fact, he did not correct his “honest mistake” until after his nomination to serve as Treasury Secretary, thus negating any possible argument that he was “not aware” that he owed self-employment taxes for 2001 and 2002 since he had already been audited on that exact point.

For an administration that prides itself on transparency and high moral and ethical standards, I am truly disappointed that the Obama administration has taken an official position that this “honest mistake” does not rise to the level of disqualification. To the contrary, I think that the fact that he most assuredly was aware that he owed self-employment taxes during the course of his employment with the IMF, and absolutely knew from 2006 after his audit yet failed to correct the prior year returns, is more accurately referred to as cheating on his taxes rather than making an honest mistake. His failure to correct 2001 and 2002 after the audit of 2003 and 2004 reflects an attitude of arrogance and being above the law which is not acceptable.

Furthermore, it has been reported that Mr. Geithner actually accepted reimbursement payments for the self-employment tax that he was supposed to have paid. If this is true, then we have not only a tax cheat, but a dishonest employee who steals from his employer.

Regardless of his experience and ability to serve as Treasury Secretary, I firmly believe that this failure to pay self-employment taxes, even after the audit when there was no doubt of his awareness of his legal obligation to do so, should eliminate him from consideration. To allow him to continue as the nominee under these circumstances is a slap in the face to all Americans who honestly report their income and pay the tax due.

9. marilynn Gamble - January 17, 2009

it was not an honest mistake. Mr. geitner was reimbursed by the IMF for the taxes that he owed,but he kept the money and did not pay the taxes until he decided to pay them. What is even worse than Mr. Geitner is the President elect “lying” to the public about it being an honest mistake. This is surely a red flag about what is to come.


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